In an interesting case out of the United States District Court in Maine, an employer's third-party benefits administrator's Rule 12(b)(6) motion to dismiss was denied by the Court, with the Court finding that they are liable for acts under the Americans with Disabilities Act (ADA) and Maine state law.
The case involves a Bank of America ("BOA") employee, Elizabeth Brown, who was sexually assaulted by a male co-worker at a party outside of work. After the incident, Brown was fearful of returning to work and being around this co-worker and alleged she suffered from physical and psychological after-effects (panic attacks, difficulty sleeping, mood swings, and Post-Traumatic Stress Disorder (PTSD)) of the assault, thus, she approached BOA for an accommodation, which was refused, and lead to her termination after she missed enough days under BOA's attendance policy.
When Brown returned to work, she immediately reported the incident to her manager, who then instructed Brown to take a week off, without pay, and that they would check-in with her after they spoke to the co-worker. All the supervisor did was tell the co-worker to "stay away from Ms. Brown." Brown then asked to be moved to a more distant cubicle in the common room in which they worked, and this request was denied because the supervisor believed the "stay away" instruction was sufficient. Thus, Brown stated should would not return to work and would be applying for leave. Brown then sought medical attention, which BOA requested records of.
BOA authorized Aetna to handle disability and "FMLA" claims. Thus, Brown's doctor faxed an FMLA form to Aetna for medical leave and then Brown called Aetna to find out what documentation she needed to obtain short-term disability (STD) and FMLA leave. Aetna later denied Brown's claim for STD and upheld its denial on appeal. There was then some apparent communication issues between Brown and Aetna but BOA eventually communicated to Brown that she needed to provide more medical documentation to Aetna to justify continuing leave. Thus, Brown had her doctor fax "BOA/Aetna" more documentation to substantiate her leave. Aetna then stated they needed even more information, which Brown supplied and asked if that would be enough but Aenta never replied and told BOA that she was being placed on a "LOA-closed" status and directed BOA to take action within 3 days, which was her termination.
Aetna's Motion to Dismiss Under Rule 12(b)(6)
Brown subsequently filed suit against BOA and Aetna alleging disability discrimination and failure to accommodate claims under the ADA and state law. Aetna filed it's Rule 12(b)(6) motion to dismiss claiming that they (1) are not a proper defendant in an ADA discrimination action and that (2) it cannot be held liable as BOA's agent for any civil wrongs committed by BOA as Brown's employer.
Under their first point, Aetna argues that they are not a "covered entity" under the ADA as a third-party benefit claim administrator, not an "employer," and that even if they are considered a "covered entity," they are shielded from liability under the safe harbor provisions of 42 U.S.C. sec. 12201(c). "This is so, in Aetna's view, because 'Aetna administered the terms of a bona fide benefit plan that is not subject to State laws that regulate insurance.' Aetna argues that BOA's benefit plan was not 'subject to state laws that regulate insurance' because sec. 502(a) of ERISA completely preempts any such state law." Aetna then further claims there is no agency relationsip because her causes of action arise out of her employment contract with BOA and that Aetna was not a party to any contract with Brown and therefore cannot be held liable for BOA's decisions regarding the conditions or decision to terminate Brown.
The Court concluded that this issue came down to whether Aetna was constructively Brown's "employer" as an agent for BOA under the statutory definition in 42 U.S.C. sec. 12111(5)(A) which states an "employer" is, in relevant part:
"a person engaged in an industry affecting commerce who has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year, and any agent of such person."
The Court noted that both parties relied on Carparts, which is a 1994 case out of the 1st Circuit that described three potential theories under which a plan provider would be an "employer" under the ADA for purposes of Title I of the ADA. After an in-depth discussion, the Court concluded that Aetna would only be liable as an "agent" of BOA if either: (1) the bulk of the "relevant indicia of employment" are within Aetna's control, (citing Lopez, 588 F.3d at 86-88; Camacho, 369 F.3d at 576-78); or (2) Aetna exercised control over one aspect of Brown's employment so significant that it was "intertwined" with BOA for the purposes of the ADA. (citing Carparts, 37 F.3d at 17).
Because Brown relied on the theory that Aetna can be held liable as BOA's agent because Aetna acted on BOA's behalf in "providing and administering employee health benefits" and because she plead this is several areas of her Amended Complaint, this sufficiently established that Aetna might have been Brown's "employer" under the 1st Circuit's framework. Because the issue is whether the pleadings were sufficient, this allowed Brown's claims to proceed against Aetna and the Court noted that, "the overriding lesson from Carparts is that the issue of who is an 'employer' will rarely be resolved on a motion to dismiss." That is, Aetna will have to settle or shoot for dismissal at summary judgment to show they are not an employer combining the facts with the previously mentioned legal standards.
Next the Court dealt with Aetna's safe harbor argument. Because Brown was not contesting Aetna's refusal of her STD leave but rather Aetna's ability to handle all types of leave, including leave required under the ADA, which is something typically dealt with by an employer, the Court decided this placed Aetna outside of the safe harbor provisions, yet another factual issue to be addressed at summary judgment.
The case is Brown v Bank of America, NA, March 7, 2014, Woodcock, J, Jr